Download - Math in the News: 11/21/11
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11/21/11
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NBA Labor Dispute
• It’s unclear if there is going to be an NBA season. Already the season will at best be shortened with games starting no earlier than mid-December.
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NBA Labor Dispute
• The reason is that the owners and players have yet to agree on the terms of a new collective bargaining agreement.
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NBA Labor Dispute
• To get a better understanding of the labor dispute, let’s review financial information (source: Forbes). Let’s start with Revenue.
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NBA Labor DisputeNBA Revenue ($millions)
Year Tickets Sales Other Revenue Total
1989-90 $518 $516 $1,034
1990-91 $578 $783 $1,361
1991-92 $649 $923 $1,572
1992-93 $680 $919 $1,599
1993-94 $775 $1,096 $1,871
1994-95 $826 $1,201 $2,027
1995-96 $950 $1,389 $2,339
1996-97 $2,557
1997-98
1998-99 $1,611
1999-00 $937 $2,038 $2,975
2000-01 $3,091
2001-02 $3,260
2002-03 $1,168 $2,072 $3,240
2003-04 $1,192 $2,231 $3,423
2004-05 $1,220 $2,395 $3,615
2005-06 $1,211 $2,463 $3,674
2006-07 $1,258 $2,562 $3,8202007-08 $1,246 $2,612 $3,858
2008-09 $1,224 $2,661 $3,885
2009-10 $1,146 $2,659 $3,805
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NBA Labor Dispute
• Now let’s look at a graph of the Revenue.
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NBA Labor DisputeNote the steady increase in revenues, except during the one previous season where there was a strike-shortened season.
Previous strike-shortened season
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NBA Labor Dispute
• Notice how revenues have been flat for the past few seasons.
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NBA Labor Dispute
• Now let’s repeat the process with Expenses.
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NBA Labor DisputeNBA Expenses ($ millions)
Year Tickets Sales Other Revenue Total
1989-90 $420 $394 $814
1990-91 $534 $574 $1,108
1991-92 $686 $598 $1,284
1992-93 $775 $522 $1,297
1993-94 $775 $677 $1,452
1994-95 $934 $520 $1,454
1995-96 $1,097 $785 $1,882
1996-97 $2,297
1997-98
1998-99 $1,830
1999-00 $1,773 $993 $2,766
2000-01 $1,920 $990 $2,910
2001-02 $1,865 $1,093 $2,958
2002-03 $2,021 $1,008 $3,029
2003-04 $2,017 $1,082 $3,099
2004-05 $2,091 $1,258 $3,349
2005-06 $2,166 $1,282 $3,448
2006-07 $2,206 $1,302 $3,5082007-08 $2,219 $1,314 $3,533
2008-09 $2,323 $1,323 $3,646
2009-10 $2,204 $1,418 $3,622
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NBA Labor DisputeNotice that expenses have been cut back in recent years due to the decline in revenues.
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NBA Labor DisputeAn important statistic is the Operating Income, which is the amount income earned before taxes are paid. This is often a good indicator of the overall economic health of an organization. Let’s look at a table of the Operating Income.
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NBA Labor DisputeNBA Operating Income ($ millions)
Year Operating Income1989-90 $2201990-91 $2531991-92 $2881992-93 $3021993-94 $4191994-95 $5731995-96 $4571996-97 $2601998-99 -$2191999-00 $2092000-01 $1812001-02 $3022002-03 $2112003-04 $3242004-05 $2662005-06 $2262006-07 $3122007-08 $3252008-09 $2392009-10 $183
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NBA Labor Dispute
• You can see why strikes are such a problem. They lead to dramatic losses in profits.
Previous strike-shortened season
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NBA Labor DisputeAnother important statistic is the Operating Margin, expressed as a percent. This statistic provides important information on how a business is growing from year to year.
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NBA Labor DisputeNBA Operating Margin
Year Operating Margin1989-90 21.28%1990-91 18.59%1991-92 18.32%1992-93 18.89%1993-94 22.39%1994-95 28.27%1995-96 19.54%1996-97 10.17%1998-99 -13.59%1999-00 7.03%2000-01 5.86%2001-02 9.26%2002-03 6.51%2003-04 9.47%2004-05 7.36%2005-06 6.15%2006-07 8.17%2007-08 8.42%2008-09 6.15%2009-10 4.81%
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NBA Labor Dispute
• You can see that since the last strike-shortened season, the NBA’s profitability has declined. This puts added pressure on both sides to strike a deal.Previous strike-
shortened season
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NBA Labor Dispute
• The NBA is a in a different position than the NFL. With the NFL the issue was how to divide a growing pie between owners and players. With the NBA the issue is how to divide a shrinking pie.